Malta’s strategic position and majestic natural harbours, the warmth of the sun, the clarity of the sea and the welcoming attitude of the Maltese people won hearts of visitors for many years. For years thriving tourism industry has been firmly established as the key pillar of the Maltese economy. However, financial services sector in recent years developed to the extent that it has become the driving force of the economy and the corner stone of the success in recent turbulent times in maintaining a strong above-average economic growth. Malta is not only a holiday destination – with competitive operating costs, favourable tax regime and strategic location at the heart of the Mediterranean with very close ties to mainland Europe, North Africa and the Middle East, it is the ideal jurisdiction in which to set up your business. There are numerous advantages of registering your business in Malta:
- European Union Member State since 2004,
- Euro is the official currency since 2008,
- highly developed financial services centre,
- competitive tax regime with attractive package of incentives,
- status of a reputable onshore jurisdiction with strong legal system,
- double tax treaties with more than 60 countries,
- low set up and operating costs,
- English as an official language,
- highly qualified, well-educated and multilingual labour force at competitive rate,
- efficient legal, accounting and banking services,
- high standard of living,
- strategic location with excellent flight connections to Europe’s major financial centres,
- solid ICT infrastructure,
- forward-looking authorities having pragmatic and pro-business approach towards regulation,
- possibility of re-domiciling or continuing companies into and out of Malta.
Trusts & Foundations
Malta is one of the few jurisdictions that cater for both trusts and foundations. While trusts are peculiar to systems of law based on common law and are not generally found in civil law countries, Malta, a civil law country, is an exception to this rule. Malta trusts and foundations benefit from a number of advantages when compared to other trust jurisdictions and the country’s lower set-up and management costs are proving attractive to both corporate entities and high-net-worth individuals.
Setting up of trusts in Malta is regulated by the Trusts and Trustees Act. The MFSA is responsible for the authorisation, regulation and supervision of trustees in Malta. Business Serving Limited provide trust management and administration services with comprehensive tax and legal guidance and support in respect of all trust-related matters.
Trusts are considered to be transparent for tax purposes, in the sense that income attributable to a trust is not charged to tax in the hands of the trustee if it is distributed to a beneficiary. Also, when all the beneficiaries of a trust are not resident in Malta and when all the income attributable to a trust does not arise in Malta, there is no tax impact under Maltese tax law. Beneficiaries are charged to tax on income distributed by the trustees. Income attributable to a trust that is not so distributed to beneficiaries is charged to tax in the hands of the trustee at the rate of 35%.
Maltese Foundations are regulated by the Second Schedule of the Civil Code (Chapter 16 of the Laws of Malta), which dedicates an entire sub-title to foundations. It is possible to set up both a private and a purpose foundation in Malta. The setting up of a foundation entails the registration of the deed of foundation with local authorities such as the Office for the Registrar of Legal Persons. The foundation gains its separate legal personality through this registration. As foundation administrators have fiduciary obligations towards the beneficiaries, they too require licensing in terms of the Trusts and Trustees Act.
A foundation may be treated as a Maltese company and benefit from Malta’s full imputation system. Foundations may also opt to be taxed in the same manner as a trust.
The development of Malta as the jurisdiction of choice for various types of collective investment schemes has been greatly aided by the efforts of the local financial services authority, the MFSA, which adopts a prudent but flexible approach, providing a solid regulatory framework whilst encouraging progress and innovation. A Malta investment fund operating in or from Malta requires a licence under the Investment Services Act, 1994. The applicant for a Malta investment fund must be “fit and proper” and willing and capable to act in accordance with the laws associated with Malta investment funds as well as any standard licence conditions attached to the licence issued. Malta-registered collective investment schemes are generally not subject to Malta tax. When properly structured, such schemes would benefit from the following:
- no income or company tax is imposed on schemes having more than 85% of their underlying assets situated outside Malta,
- no tax on the Net Asset Value (NAV) of the scheme,
- no withholding tax on dividends paid to non-residents,
- no taxation on capital gains on the sale of units by non-residents,
- no stamp duty on issues or transfers of units,
- no taxation on capital gains on the sale of shares or units by residents provided such shares/units are listed on the Malta Stock Exchange (MSE).
Citizenship and Passports
The Malta Citizenship by Investment Programme is the first EU approved citizenship programme. Citizenship obtained under this programme grants the rights of full citizenship for life and can be passed on to future generations by descent. Maltese citizenship grants access to all investment opportunities in Malta and throughout the European Union open to Maltese and European Union citizens. To qualify for Malta Citizenship by Investment, the main applicant is required to contribute at least €650,000 to Malta. Of this contribution, 70 per cent will go into the Fund set up by the Government of Malta and run by a board of trustees. The rest goes to the consolidated fund. Applicants must be represented by an Accredited Person that is a licensed Maltese Authorised Registered Mandatory (ARM). A passport may be requested by obtaining and completing a separate form after the citizenship has been granted.